The performance management process is a collaborative, communication-based process where employees and management work together to plan, monitor and review the employee’s short and long-term goals, job trajectory and comprehensive contribution to the company. This process is continuous, with regular sessions where both management and employees have the opportunity to give and receive feedback.

Employers often think the performance management process equals an annual employee performance evaluation and treat it as a one-time annual event. This practice limits the potential opportunity associated with adopting a performance management process which is a continuous cycle of activities aimed at improving employee performance and engaging employees to do their best work.

According to a Gallup State of the American Workplace study, only 22% of employees are engaged and thriving. Employees who are engaged and thriving are more likely to maintain strong work performance, even during difficult times. This also means that 78% of the workforce could do better work if only their organization had the right type of management process.

Some of the reasons for low engagement cited in this study relates to lack of motivation as employees see less deserving employees receive promotions, lack of actionable feedback, and management not involving employees in goal setting. All of these indicate the importance of having a performance management process in place, and why each part of it must be done well for the process as a whole to succeed.

The performance management process, when done correctly, is designed to fix problems in the workplace, setting employees up for success in achieving both their personal goals and overall company objectives.

Performance Management Process Steps

The steps in the performance management process can be broken down into four categories: planning, coaching, reviewing and rewarding. Each step is equally important, and together form the foundation of a company’s performance management process.

Planning

The first step of the performance management process is Planning.

The Defining Stage

The performance management process begins with the planning stage. Management and HR start by defining the job function itself, including a comprehensive description of responsibilities and requirements, long and short-term goals and a clear metric for how those goals will be assessed.

Goals should be clear, done in the SMART format (specific, measurable, attainable, relevant, time-bound) and clear performance standards should be established.

The following are goals examples:

• Sign Contracts for 2 New Clients Averaging $500,000 per Sale Every Quarter in 2022.
• Collect $50,000 in Accounts Receivable Over 90 Days by March 31, 2022 and Maintain $0 Balance Going Forward.
• Research, Evaluate and Select New CRM Vendor by End of Q1 2022. Implement New CRM in Q2 2022. Train Sales Team in Q3 2022.

The Feedback Stage

Once management has completed the defining stage, employees should have the opportunity to give input on the job description and goals. They are the ones doing the job and will have key insights into what skills, competencies and goals will best assist the company to achieve its organizational goals.

The Alignment Stage

Management and employees both review and agree on the role definition, responsibilities and goals.

By making this first step of the performance management process collaborative, management sets the stage as a whole for a collaborative process that the employee feels they are involved in including goal-setting – an important aspect, as evidenced by the Gallup study.

Coaching

The second step of the performance management process is Coaching. The role of a coach vs. a manager is to help the employee improve their performance. Think about a basketball coach who has a player with a low free-throw percentage. The coach helps by evaluating shooting mechanics, suggesting changes to the player’s form and helping the player practice shooting 100 free throws at the end of every practice. They jointly review progress by evaluating improvements in the player’s free-throw average. This same coaching model applies to the workplace.

Organize Meetings on a Timely, Regular Basis

Once the parameters of the job and goals for the future have been set, the next step of the performance management process begins.

The coaching process is extremely important and must be done on a regular basis. Establishing a meeting rhythm is essential to foster communication and accountability. Meetings should be at least quarterly, although monthly or even weekly meetings are ideal.

A proposed coaching agenda includes the following:

• Start with a quick status on how things are going…successes, concerns, etc. to help break the ice.
• If there’s a scorecard with KPIs, review these to track progress or identify potential issues.
• Review status of goals…is the employee on target, need assistance, etc.
• Identify issues and follow-up items including ownership and timeframe.
• Close by reviewing any significant issues and follow-ups and setting expectations.

Both the employee and coach should come prepared with information related to goals, metrics and issues. This is a partnership and both parties need to take responsibility to make these meetings effective and productive.

Provide Necessary Training, Coaching and Solutions

These meetings should focus on solutions and coaching opportunities, rather than punitive measures for lackluster performance. Both parties should come prepared with examples and potential solutions for discussion.

If accountability is made into a negative, then employees will avoid it rather than be honest about where they are struggling.

In some cases, management training in this area can be very helpful to an organization.

Solicit Feedback on Both Sides

Management should be able to give – and receive – honest feedback and work with employees rather than adopting a combative stance. The manager needs to be a good listener to better understand the employee’s perspective and ask clarifying questions before making judgments. It’s also important to provide actionable feedback at this stage so both parties walk away with clear actions and accountabilities.

Revisit Goals as Necessary

As the performance management process continues, management should revisit goals to see if adjustments should be made, as well as pay attention to career development opportunities for their employees.

Reviewing

The third step of the performance management process is Reviewing. This step involves reviewing the overall performance of the employee as well as how well the process itself worked.

Reviewing Employee Performance

In addition to the regular meetings, at the end of the yearly performance management cycle, there should be a formal employee Performance Review. Typically, these are held once a year, to look at how well the employee performed over that span of time.

Managers should provide each employee with a self-evaluation form in advance to document their performance and results. This is considered a “best practice” that allows the employee to prepare for the review. This also provides specific areas to focus on in the review where there may different opinions.

There should be a clear record from previous check-ins to show the employee’s progress throughout the year. The monthly or weekly check-ins are to help the employee with problem-solving, adjusting goals and other future-looking tasks. This formal performance review includes evaluation of the following areas: goal achievement, core values, job duties and competencies, along with a plan for improvement as needed.

Reviewing the Performance Management Process

At this stage, it is important for both management and employees to look over the previous year and see how well the performance management process worked.

Questions that can be asked are:

• Were personal and organizational goals met? If not, why?
• What challenges did the employee face?
• What training would help the employee perform better?
• How did management feedback help? If not, why?
• How could the process be made better?
• Was the time spent on this process effective?

Reviewing Overall Goal Completion

The main questions to answer include: “Did the employee reach their goals?” and “How well did the employee succeed at the duties given to them throughout the year?”

If applicable, this should include a discussion on why these items were not achieved and what can be done to improve in the future.

Giving Actionable Feedback

A key part of the review is to give and receive feedback. Management should give actionable feedback to the employee so that they know areas where they can improve future performance.

The employee should also be invited to give feedback on the process, and how management can do better on their end.

Rewarding

The fourth and last step in the process is Rewarding. Providing positive feedback is an essential element throughout the entire performance management process…not just the formal annual performance review.

Rewards and Recognition

The last element of the performance management process is reward and recognition.

This element is absolutely key – employees will not stay motivated if they are given no reason to. This does not necessarily have to be monetary, although it will likely include monetary compensation. Other rewards could be new projects, company-wide recognition, time off, or leadership opportunities.

When applicable, recognizing an employee’s good performance and behavior in front of their peers and colleagues is a very powerful motivator for the employee to continue these positive activities.

Setting the Stage for Next Year’s Cycle

The end of the performance management cycle gives management and employees one last chance to offer feedback on the process as a whole and asks for thoughts and feedback for the planning stage for the next year’s cycle. This can include new goals and opportunities for personal and career growth.

Summary & Conclusion

Performance Management is a continuous process that includes ongoing feedback and discussion between employers and employees. It is a fundamental element of motivating and engaging employees to do their best work that consists of four steps: planning, coaching, reviewing and rewarding.

Like any process, it requires discipline to maintain regular meetings with employees to review goals and have honest discussions regarding performance. This shared responsibility is essential and consists of establishing goals and clear expectations. It also relies on rewarding and recognizing employees for positive behaviors and achievement of goals.

Remember, performance management is a process, not a once-a-year event.